In a factory on the outskirts of Phoenix, Arizona, workers in cleanroom suits handle silicon wafers in ultraclean rooms. Thousands of miles away, on the island of Taiwan, the world's most advanced lithography machines print circuits barely three nanometers wide. And on the border between Germany and Poland, a new plant begins producing chips for cars and satellites. The geography of semiconductors is shifting faster than it has since the 1990s.
Global investment in chip fabrication is expected to exceed $500 billion between 2024 and 2027, according to the Semiconductor Industry Association.
The semiconductor supply chain, concentrated for decades in Taiwan, South Korea, and Japan, is being reshaped. The United States passed the CHIPS Act in 2022, injecting $52 billion in subsidies to attract plants to its soil. The European Union responded with its own European Chips Act, worth €43 billion, while China, through its National Integrated Circuit Industry Investment Fund, seeks to bypass export restrictions.
The Taiwan knot and the shadow of conflict
Taiwan produces over 60% of the world's most advanced chips and 90% of those under 10 nanometers. Any disruption to its output—whether from an earthquake or a military escalation—would halt global production of phones, servers, and cars. China, which considers the island part of its territory, has intensified military drills in the strait. In response, Washington has accelerated the construction of domestic plants and pressured allies like Japan and the Netherlands to tighten export controls on lithography equipment.
What is lithography?
It is the process of printing microscopic circuits onto a silicon wafer. Dutch company ASML produces the most advanced machines, capable of etching lines just a few nanometers wide.
New players and the race for autonomy
India, with its recent chip manufacturing incentive policy, aims to become an alternative hub. Companies like Tata Electronics have announced multi-billion-dollar investments. Vietnam and Malaysia are attracting assembly and testing plants, though wafer fabrication remains the most complex link. Technological sovereignty has become a mantra for governments worldwide, viewing semiconductors as a strategic resource comparable to oil.
Yet building a state-of-the-art chip fab costs between $10 billion and $20 billion and requires years of technical training. The shortage of specialized engineers is a bottleneck no subsidy can quickly fix. Meanwhile, demand for chips for artificial intelligence and electric vehicles continues to soar, pressuring delivery timelines.
Toward an investment bubble?
Some analysts warn that excess capacity could lead to a bubble. McKinsey estimates global chip supply could outstrip demand by 2027 if all announced plants come online. But governments seem willing to take the risk: supply security outweighs short-term profitability.
What this means for the world
The semiconductor dispute is not just a tech story: it is a story of power, money, and dependency. Countries that master chip fabrication will have an edge in AI, defense, and communications. Those left behind risk their economic autonomy. In 2026, the world watches as the new rules of tech geopolitics are written.